Jiangsu Expressway calms fears of toll-road takeover

PUBLISHED : Tuesday, 25 March, 2003, 12:00am
UPDATED : Tuesday, 25 March, 2003, 12:00am

H share Jiangsu Expressway has dismissed concerns about a policy change possibly forcing it to sell toll-road assets back to the provincial government.

Deputy general manager Li Dapeng said the government had given no indication that it would adjust the province's toll-collection system.

The concerns were raised last week after fellow H share Shenzhen Expressway announced it was selling two highways back to the municipal government. Its management cited the highway's maturity and the government's wish to solve traffic problems by cancelling or moving toll booths.

While the proposed sale will lead to a 39 per cent net profit shortfall and uncertainties about future earnings, Shenzhen Expressway will see a substantial gain as the government has offered a 50 per cent premium to book value for the assets.

Mr Li said his company's situation was different as its highways were inter-city roads and not affected by traffic congestion.

In an earlier research paper, UBS Warburg said Jiangsu Expressway had a national highway with slow traffic growth and toll-cancellation concerns.

Meanwhile, Mr Li said Jiangsu Expressway had recouped 110.77 million yuan (about HK$103.99 million) after 49 per cent-owned Yixing Yicao Highway was dissolved due to the construction of a competing parallel road.

In 1999, Jiangsu Expressway invested 100 million yuan in the highway and collected toll income for several years before the company was dissolved.

More money was expected to be recouped on completion of legal proceedings, Mr Li said.

Chairman Shen Changquan said the company planned to invest about 200 million yuan this year for construction of its 33 per cent-held Suzhou Sujiahang Expressway.

It also planned to widen its Shanghai-Nanjing expressway, which accounted for 59.76 per cent of last year's turnover, to eight lanes from four. The management would not reveal the estimated investment cost.